Engaging Conversations | Inspiring Dialogue, Empowering Communities

#6 - Mastering Personal Finance and Credit Management with Erica Voelkel

• Ecolibrium Headquarters Pty Ltd | EcoHQ • Episode 6

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Want to unlock the secrets of financial stability and independence? Join us for an insightful conversation with Erica Voelkel from LJ Hooker, where she demystifies the world of credit scores and their profound impact on our financial lives. Erica, a seasoned home loan specialist, shares her wealth of knowledge on how credit scores are calculated and managed in Australia, dispelling common myths and misconceptions. Learn why it's so vital for parents to educate their children about credit, and how a solid understanding of these fundamentals can pave the way for financial success and steer clear of common pitfalls.

Erica and I also explore the financial habits of young adults and the crucial distinction between needs and wants when it comes to credit usage. Discover practical strategies for parents to instill good saving habits in their children, from setting financial goals to effective budgeting. We cover essential tips for managing living expenses and debt, emphasising the importance of a well-planned budget that allocates a reasonable percentage of income. Plus, learn how to identify reliable financial advice with the help of professional registries like the MFAA and FBAA, ensuring you make informed decisions.

Financial education isn't just a personal asset; it's a community imperative. We highlight how early financial education and financial literacy can significantly improve well-being and mental health. Erica shares real-life stories that underline the severe consequences of financial overwhelm and the transformative power of financial literacy. We also discuss the evolving banking landscape, the importance of planning for major financial goals, and how to guide children towards financial responsibility. Don't miss this episode packed with actionable advice for navigating personal finance, learning about financial literacy, and ensuring long-term financial stability.

For more information, contact Erica on 0428 483 444‬ or email at evoelkel@ljhookerhomeloans.com.au

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Leon Goltsman:

Good morning, good afternoon or good evening, wherever you're tuning in from, and welcome back to Engaging Conversations, the podcast where we dive into real stories that inspire and offer practical insights for business and life. I'm your host, Leon Goltsman, co-founder of Ecolibrium Headquarters, and today's episode is proudly brought to you by Lake Mac Business and Focus, because supporting local businesses is the backbone of thriving communities. Now I'm particularly excited about today's guest. We're joined here by Erica Voelkel from LJ Hooker, Newcastle Hunter region. Erica is an experienced home loan specialist, but what truly sets her apart is that she's not just about securing funds. She's about improving lives through empathy and trust. Erica helps not only to get the right home loan, but also prepare their families for financial success. She has a wealth of experience advising families with children on how to set themselves up for a stable future. But even if you don't have kids, the insights she shares are just as valuable and relevant to everyone.

Leon Goltsman:

One of the key takeaways from this conversation is the importance of having a solid financial resume something everyone should consider, no matter where they are in life. Resume something everyone should consider no matter where they are in life. And here's something you might not have thought about before when applying for a home loan. The information you provide and the permissions you give can impact your application in unexpected ways. Being mindful of these details can make all the difference in getting the best outcome. Now, before we get started, I just want to mention that the insights shared in today's episode are based on Erica's expertise and experience, but it's always recommended that you seek independent financial advice tailored to your own situation. Neither Equilibrium headquarters nor its sponsors take responsibility for individual financial decisions based on this episode. And, with that said, sit back, relax and, without further ado, let's get into the enlightening conversation with Erica. Erica, it's so good to see you and thank you very much for joining us. Can you just start by briefly introducing yourself?

Erica Voelkel:

Hi Leon, thank you. My name is Erica Voelkel. I'm from LJ Hooker Home Loans Newcastle, Lake Macquarie and the Hunter Valley and I specialise in residential mortgages for investment and home ownership.

Leon Goltsman:

Now, Erica, you've been in this industry for quite some time. Can you tell us a little bit about how long and how you got into it?

Erica Voelkel:

I've been working in finance close to 10 years now. Previously I've been self-employed my entire life. I got into it by accident. I was working with a friend of mine who is now my business partner in loans and basically it started just answering a few phone calls and finding out that I was quite good with numbers and long-term pathways and I could see past the initial issue that was being discussed and I helped put a few things together and it just naturally evolved.

Leon Goltsman:

So a lot of things happen in life when things just evolve. You know, people get a job, they earn money, they save, they spend. But one of the things that often doesn't get talked about until it's too late is credit ratings. Now, I'm particularly interested in learning more about that, as I think a lot of the listeners as well, so can you please explain the basics of credit scores and why they're important?

Erica Voelkel:

Thank you, leon. Credit scores are super important and most people don't even realise that they have one or that they've stuffed it up before they know that they have it. The credit score process in Australia. We have quite a number of credit reporting bureaus. The most, I guess, utilised one is Equifax Veda Credit Check and it has a score that ranges from 0 to 1,200, red to green, and as a part of credit reporting we now have comprehensive credit reporting in Australia, which means every organisation or company that provides credit needs to report back to the Credit Reporting Bureau how you manage your credit.

Leon Goltsman:

And so with that, with reporting, there must be a lot of misconceptions. So what common misconceptions do people have about building good credit?

Erica Voelkel:

Building good credit is based on number one paying your obligations. Not having too many obligations, not having obligations over and above your means, but not paying them on time is what gets reported. So when you're juggling and you think, okay, well, I don't have to pay a utility because the credit card's more important, or I don't have to pay the credit card because the mortgage is more important, no, that isn't the case. Every single missed payment impacts your credit file and your credit score.

Leon Goltsman:

So what I'm hearing is that, whether it's a credit card or a utilities bill, they're just as important, aren't they?

Erica Voelkel:

Well, they really are. Any any any credit facility is equal in the eyes of your credit score and your credit reporting bureaus, so you can't miss one or the other. Um, or if you do, what you need to do is contact the people that are offering you that credit so that you can make an arrangement, because if there is an arrangement in place, often you can mitigate that being allocated in a negative way against your credit score and that seems like, um something that people can benefit from, learning those sort of things.

Leon Goltsman:

But unfortunately they don't teach you that at school and a lot of parents, um, don't teach their well, a lot of parents don't necessarily know how the process works themselves to be able to pass it on their children. So what can parents do to introduce their children to the concept?

Erica Voelkel:

Well, a lot of parents don't even know that they have a credit score themselves, so introducing it to their children is quite difficult. They won't know often if they've been refused credit, that it's because they have a poor credit score, because that's not communicated to them, it's not required to be communicated and it isn't communicated. So they can go quite a long time without realising that they have a credit impairment. So it is really difficult to then relate to your children how important it is to maintain your credit viability if you don't know that it impacts you or that you haven't been negatively. You're not aware you've been negatively impacted.

Leon Goltsman:

So it's important to educate the children and the parents and, I suppose, the teachers at school. But again, this isn't something that's talked about.

Erica Voelkel:

It's a little confusing because parents don't always communicate if they've been in trouble.

Erica Voelkel:

They don't always communicate where they've gone wrong and often that's the only way they've learnt to do it correctly. So when you have parents that advocate saving and purchasing once you've saved as opposed to getting credit you've got a good basis and a good foundation. But even a lot of adults are not aware of how the credit scoring and your credit file works, so it's very hard for them to educate the the younger, their children, on that. So and it's also not something that's brought up in schools because I guess until the children are spending, earning, spending, earning, spending and on that treadmill where they want something that they can't quite achieve, it doesn't really have any validity for them. So it isn't until they're young adults that they're moving into an area where a credit file has some meaning, and it can be often two, three, four years after they qualify for credit that they realize that they've done something to wreck that credit process. So there really should be as part of our curriculum a basic understanding of the credit file and how that works for their credit reputation.

Leon Goltsman:

So what might be the first steps for young people heading into financial independence?

Erica Voelkel:

The first and best step for a young person heading into financial independence is to save. Now there needs to be a formula for saving dependent on what they're earning and where they're living. So if they're living at home with parents and they're paying board, they need to pay into a savings account. Pay into a savings account. So, moving toward financial independence for a young person, it's very important that they cost out what their living expenses would be if they lived on their own. Okay, now, let's assume they're still with mum and dad and they may be paying minimal board minimal board just so that they can contribute to the household.

Erica Voelkel:

Okay, one thing that should be worked out is what the reality of that board should look like. So if they're paying, if they're earning $250 a week working part-time at McDonald's and they're paying $50 a week in board, perhaps that should be increased to $175 a week, with the balance being put into a savings fund, so that there is a reality associated with what living on their own looks like. When the utilities come in, mum and dad should say, okay, well, there's a 10% contribution to this, and go over with them what that cost is, what it relates to and how they need to contribute to that and then that should come out of that savings fund, the contribution to it Again, even if it's only minimal and it's only a discussion. But they should be saving the difference between what they're paying in board and what the reality of living on their own would look like, and that's where they should be going initially, before they even contemplate any sort of credit facility.

Leon Goltsman:

And that also it teaches them financial responsibility and also understanding the value of money. I mean, I've grown up with quite a few people in the eastern suburbs who didn't have to pay board and it does translate to their spending habits as they get older. So what do you think about that?

Erica Voelkel:

Well, my children never had to pay board when we lived at home. We owned our home and there was no costs. However, whilst they were living at home, they had to do two things. One, half of what they earned had to be banked, and half of what they banked could be spent at any given time. But the banked money was only allowed to be for a purpose it wasn't to spend to go out, so it had to generate a significant purchase on that banked money. Now, if they didn't want to live at home and and the purpose of behind that was to get a car or a house deposit or whatever it was. So whilst they lived at home and we covered everything not a problem they still had to bank half of what they earned.

Leon Goltsman:

With children, obviously. With the pressures these days of having to fit in and keep up with the latest trends, and with all the facilities such as after pay and all the other pay by now, pay later. What's your thoughts on that?

Erica Voelkel:

The conversation needs to really centre around needs versus wants. Credit is only good in a needs situation versus wants. Credit is only good in a needs situation by saying that if you require a fridge, your fridge is broken down and you don't have the funds to purchase a fridge. That's something that should be considered acceptable on credit and certainly don't take any more credit out until it's paid for. However, if you wanted a fridge with an ice dispenser and a water liquefier and all of those sorts of things, is that actually a fridge with an ice dispenser and a water liquefier and all of those sorts of things? Is that actually a need or is that just something you want? If it's something you want, save up and buy it. Sell the old one, add the difference, buy a new one, and that goes for anything. If it is a need, consider a credit facility. If it is a want, save up for it.

Leon Goltsman:

What else can parents do to incentivise their children to save money and to be able to really understand the value? Because I know when I was growing up I had a wallet and in my wallet I've had coins and notes. And if I had no coins and notes I had no money. I went home. These days there's other options and it's all tap and go, so people don't necessarily see how much money they've got left until they get the bill at the end of the month. So what's your take on that?

Erica Voelkel:

I really like the concept of sitting down and discussing goals, so we could have some short-term goals and we can have some long-term goals as a family and as an individual within that family unit.

Erica Voelkel:

So if we're going on holiday to Disneyland and we're looking at teenagers let's not look at children 12 and under because you know that's not relevant to them, but we're looking at teenagers and we're looking at how they want to spend then perhaps we sit down and we have a conversation about what part of that is covered by the parents and what part of that is an add-on or a special or something that's specific to them. And please include their choices and what they want in that conversation, but also let them know that there's a cost to it. For instance, if you want to go out for pizza one night, let's have a conversation about how much that costs. And can we do it once a week or once a month? Can we go out and go to a football game, a live football game, how much that will cost, how much the individual tickets are and what can be contributed to that to ensure that it's a family group and a family outing.

Leon Goltsman:

So having a budget is essential. I that it's a family group and a family outing, so having a budget is essential. I know it's essential in business, it's essential at work, but it's also essential in running a family. Can you tell me your experiences, or some of your clients' experiences, who have had a good budget and perhaps maybe not so good? What implications has that had?

Erica Voelkel:

A budget and everyone hates a budget but a budget revolves around determining what your UMI is, and your UMI is your unallocated monthly income. Now, that needs to be 50% of your generated income. So if, when you sit down and work out exactly what it is that you're spending and your life expenses, your living expenses comes to 50, this is not debt. Let's not talk about debt. Let's talk about living expenses. It should not be more than 50 percent of your generated income ever. It should sit around that 35 to 40% mark. That's groceries, utilities, rent, fuel to get to work, etc.

Erica Voelkel:

Then you add your debt allocation. Now your debt allocation should not be more than an additional 20% of your income into the home. So if your debt allocation is more than 20% in addition to your living expenses, it's too much. You should not be looking at more than 70% to exist from income that's generated into your home. That's a dual income or a single income family, and a lot of people find that they're hitting 100, 110%. And this is where credit and credit facilities come into play and that's where you really need to make that determination as to whether that's a need or a want if you're going to utilise the credit facility.

Leon Goltsman:

So, from all the experts out there and we seem to run into a lot of them, from your taxi drivers to your I don't know your shop owner across the road how do you know that the person you're talking to actually knows what they're talking about?

Erica Voelkel:

And to really determine that somebody knows what they're talking about in relation to finance. If it comes from mum's brother's uncle who is a mortgage broker or wants to give you advice, yeah, that's not where you need to go. There's Australian Professional Registries, which is the MFAA, which is the Mortgage and Finance Association of Australia, and the FBAA, which is the Finance Brokers Association of Australia. You need to be accredited with one or either of those, or both of those, in order to give financial, in order to give credit advice. Credit advice is only valid if it comes from somebody who is aware of policies within the bank, so they need to be accredited with individual banks. If they're giving you information from a bank or an affiliation, or information, even on your existing credit position, and they are not associated or accredited by those institutions, they've got absolutely no ability to give you that information. It's not valid. There's there's no substance behind it.

Leon Goltsman:

They're trying to sell you something so you're telling me the things I see on Facebook are not true?

Erica Voelkel:

Absolutely not. There's no information that can be disseminated in a general platform like Facebook or Twitter or any of them that is actually relevant to you. Your independent information comes based on your own individual circumstance.

Leon Goltsman:

So, with all the social media that's going on, a lot of people are getting their information from influencers, from Instagram, from TikTok. I mean, what role has that played, or what influence is that playing on young children?

Erica Voelkel:

There's a lot more pressure these days put on families and children based on the influencers that are online on the social media platforms are online on the social media platforms. There is more availability, I guess, of who has what and what brand they have and how they've achieved that, and you're only seeing on these social media platforms the upside. You're seeing the unboxing, you're seeing the pictures of wearing the brands, you're seeing the pictures of people in the optimal position. You aren't seeing what it takes to get there. You aren't seeing what happens when all of those obligations coincide and they're sitting there trying to figure out what to pay, how to pay it.

Leon Goltsman:

And that's why we've got buy now, pay later. How does that work?

Erica Voelkel:

With the buy now, pay later, the zip after pay, those sort of things paying for, you're putting yourself into a position of overwhelm when they all coincide. So initially it isn't a huge payment in the outlay and you might do that three or four times with small payments in the outlay, and you might do that three or four times with small payments. But then you find when the payment, the next payment's due, or the third payment's due or the fourth payment is due, that payment comes along with fees, it comes along with all of those things that now suddenly you multiply that by 10 times it's an overwhelm and you would not have purchased that in the first place. You really need to know what your point of reference is for, how much you're willing to pay or how much available income you have available for the buy now, pay later. You should never exceed. You need to know your numbers. You should never exceed your capacity to make those repayments and still stay comfortable within the means that you have available to you.

Leon Goltsman:

And that's the saying. Well, the saying goes that if you can't, you can't manage what you don't measure, and so obviously one needs to know how much they're earning and how much they're spending, because no one likes those surprises, do they?

Erica Voelkel:

No one likes the surprises of exceeding what they're earning by what they're spending, and what you'll find is your bank statement is critical in understanding that we don't, as a society, maintain, manage or even look at our bank statements. What we look at is the balance left on our card or our account to spend. Our bank statement is our financial resume. It is equally as important as our professional resume, particularly if you're going to ask a bank for anything at all. The first thing they are going to do is look at how you manage everyday expenses, how you manage your everyday cash flow, and if that isn't managed perfectly, if that isn't managed in a way that shows that you are a person that they want to invest in, that they want to give money to, it's not going to happen. And it's quite important that you don't exceed your limits. It's quite important that there aren't any default repayments. It's quite important that you don't ever exceed your income in your expenses on your transaction accounts.

Leon Goltsman:

So what is an emergency fund and how does it work?

Erica Voelkel:

An emergency fund is a critical part of our financial plan, whether it's a business, whether it's a family or whether it's an individual. You need to ensure that there is three months in that emergency fund of your day-to-day living expenses and debt obligations. Let's assume that somebody's out of action, your primary breadwinner is gone. What we need to do is allocate a percentage of our income each week that goes into that and it's a no-touch savings account. It can be an offset account against a mortgage, so it reduces your interest. It can be a savings a high-interest savings account. It can be an offset account against a mortgage, so it reduces your interest. It can be a savings a high interest savings account not that there are many of those around at the moment or it can be a term deposit when it gets to a certain level. Getting bonus interest on that savings account when you don't touch it or you don't withdraw from it is also quite important and it assists you.

Leon Goltsman:

However, it needs to be ultimately three months worth of your expenses ideally six, wonderfully, if wonderful if it was 12 but at a minimum you need three months of your living expenses and debt obligations in an emergency fund and I know you've mentioned in our previous conversations where you actually helped a lot of young people achieve not only achieve an emergency fund, but also get themselves back on their feet is that a service that you can provide people with if they wanted to learn more about it?

Erica Voelkel:

absolutely. We're looking at doing some workshops in the near future to discuss that very topic and to to ensure that I guess the youth that that haven't been exposed to it within the schools or with parental guidance understand really well. I look to be honest. I think there is an obligation with employers to disseminate that information down to their staff, because if you have a staff force that is constantly worried about their money or their debts or their repayments, they're not focused on their business, and if they're worried about those sort of things, they're looking for a new job, they're looking for the next pay rise, they're looking for a lot of things that aren't supportive of them being great employees, and so I think there's an obligation there from employers to assist with that.

Leon Goltsman:

And you did mention employers, so how can local businesses and community organisations support financial education for families?

Erica Voelkel:

So local businesses, community organisations can support families, employees and people in a little bit of financial distress by partnering up with the organisations that provide that support? Certainly we do. We can assist with workshops and downloads, one-on-one sessions to support people through whatever it is that's stressing them at the moment.

Leon Goltsman:

And when people find themselves in a financial stressful situation, it doesn't always have to be that way, does it?

Erica Voelkel:

in a financial stressful situation. It doesn't always have to be that way, does it? It absolutely does not have to be a financial stress. Sometimes you are in overwhelm by what you're experiencing and not realising there's very easy opportunity to manage it. It depends on what the people around you can offer, and certainly there are people who have the experience and have the financial resources to advocate for you with whoever you're having a struggle with on a credit level and also to set yourself up one of the the biggest things that I endorse with, particularly with young people who come to me for a home loan and they're just not in a position to do it yet. Let's look at the next six months changes that we can make to increase the income that we can save. Let's look at the next 12 months goals that you have in place and then look at three years. You don't have to change how you're living right now. You can still live the way you want to live, but small changes will make a big difference to long-term planning.

Leon Goltsman:

And a lot of people are afraid of not knowing what's ahead, and I think that in itself causes a lot of stress. But part of financial planning and organisation understanding your budgets is, in a sense, you are prepared for when something happens, and that has a huge positive impact on families.

Erica Voelkel:

It really does Good. Solid financial management will help families through a lot of different distressful times.

Leon Goltsman:

So whether that is perhaps domestic violence that's a result of financial stress, and we're not saying just because you have money, no money, there's going to be domestic violence, but it certainly is a contributing factor, especially in certain demographics, isn't it?

Erica Voelkel:

Oh, it absolutely is. Anything that's negative will impact people in different ways. There's a high level of suicide generated from financial distress, when that conversation could have easily been had and it could have averted that, because the overwhelm that a person feels is often easily negated when there's a management plan in place and when you can see that there's a pathway that will guide you through the worst part of it.

Leon Goltsman:

And what are some of the most significant impacts you might have encountered throughout your career?

Erica Voelkel:

I've experienced throughout the course of my career some pretty significant impacts on what I do and how I do it and the direction that I now generate my personal priorities. So we had a gentleman come to our office. It was a Saturday morning. We weren't usually open on a Saturday. This morning we happened to be and we were going through and archiving, so we were all in our casual Saturday clothes and dusty as and.

Erica Voelkel:

He's walked in the door and he looked serious, he looked stressed and he asked if we could console their debts. And at the time we were really only focusing on residential mortgages. But there was just something about him and I asked him to sit down and tell me what the situation was. It turned out his son was in such a dire strait with financial overwhelm that he'd found out the night before he was considering suicide. Now that, just as a parent broke my heart and his story. So dad had his own home, he owned his own home and he had three investment properties. He was well off. He was. He was in a position to pay out his son's debts, but his son never went to him until it was that very last cry for help, because he didn't want to appear weak. He didn't want to appear like he couldn't do what his dad did.

Leon Goltsman:

And that seems like people feel ashamed. The youth are shamed.

Erica Voelkel:

It absolutely was a shameful situation and again, his dad had struggled. Before he bought his first home. He had struggled as well, but because that was never communicated, it looked like it had been an easy path. So he told us about his son and what had happened was he was offered an apprenticeship and so he was living at home in his first year and with all this extra money that he had, with no obligations whatsoever dad didn't charge, board or have a financial commitment agreement he bought himself a car that was over and above what he should have had, both as a 19-year-old, being in control of this very fierce vehicle, and on a financial level, and, in all fairness, the company should not have ever approved him like that. That was our biggest thing to get him out of the issue. When we finally started working with him, however, he got this very high level loan with high repayments, and while he was living at home. That was fine, but within 12, as young lads do he got himself a girlfriend and then they decided to move out and move in together. They were both working. So now he has a car with a very high repayment, but he also has a rental obligation, utility obligation, food obligation, none of which he'd had previously. And this was okay again for the first six months. But then, as as happens, they broke up. The lease was in his name so he had to maintain. She walked away. He has had to now maintain the lease and all the requirements, try and find a flatmate.

Erica Voelkel:

That didn't go very well and suddenly there were starting to be missed payments on loans, missed missed rent. So that goes on ticker, which is a whole other conversation. And then he started to get and this was over a period of six months, it wasn't a short term but then he started to get repossession notices for the vehicle. So he's given the vehicle back, not even considering it, thinking okay, well, they'll sell it and that'll come off his debt. They sold it for a fraction of what he still owed on it.

Erica Voelkel:

So now he not only owed the balance but he also was compounding daily interest because it was default interest on top of what he had. So now his loan was almost double what he purchased the car for physically in the first instance. Now that is one of our big four, a subsidiary of one of the big four that put this young lad into this situation and this is where he thought I just I can't deal with this anymore. When he found out that was his debt, he just couldn't deal with it and I think that phone call was to his, to his dad, was both a cry for help and a goodbye, because if his dad hadn't have picked up on what was going on, I think that would have been a goodbye call, to be honest.

Leon Goltsman:

And I just dread to think how many other people and families would have been going through the same thing.

Erica Voelkel:

Yeah, absolutely. Well, when his dad brought this situation to us, I'm like it's not even a thing, I can fix it up now.

Leon Goltsman:

So, erica, come on, give us some good news. There must be some silver lining to this story, because I don't want to end on a negative.

Erica Voelkel:

No, absolutely, because debt management is not new and it's not located to one or two people. It is one of the biggest impacts this country has on families. We were able to immediately put some strategies in place that stopped what was happening to him legally, that stopped what he was having to deal with financially and got him to a place that he could then manage the repayments. And we even went and fought for him and got the the car loan wiped entirely, because he should never, as a young person, been put in the position that he was put into, let alone the aftermath of after they repossessed it. There were a lot of things done incorrectly, but unless you've got a voice of reason, unless you've got somebody that understands these things to go and advocate for you, you don't know what's available to you.

Leon Goltsman:

You don't know that they've done the wrong thing and you can get away well, last week we had um an interview with emmanuel from chamber of commerce, and he is the voice of the community and the businesses. Um, and and I personally have seen the difference that makes to um for, for, for speaking out for people and on behalf of people. What I'm hearing from you is that you're actually speaking out, uh, for people who could have been taken advantage of, and if they don't know about it, I feel the companies probably wouldn't even bring it to their attention. It's almost like let's see what we can get away with. Do you find that sometimes happens?

Erica Voelkel:

Absolutely. If there's no resolution, and often people don't realise the avenues that are open to them to fight a debt or to not even fight the debt, even if they're in the wrong and they owe the money, money, there are still options and opportunities for them not to get into a place of distress in relation to it. It is a manageable situation and it is numbers. It's just figures and conversations, but if you bury your head in the sand and you don't deal with it up front, it will compound and it will get worse. And you don't deal with it up front, it will compound and it will get worse.

Erica Voelkel:

But knowing what options are available to you is where people do stop and just do the berry thing. So when there is an option that's available, when there is something that can be discussed, put on paper and an avenue because under our financial guidance, under all of our rules and regulations, we cannot knowingly put somebody into financial hardship without offering alternate routes. Because under our financial guidance, under all of our rules and regulations, we cannot knowingly put somebody into financial hardship without offering alternate routes, and that is every finance provider in the country. So in every single situation there is an option, if you get into trouble to get assistance to help you out of that.

Leon Goltsman:

But obviously you need somebody who knows what they're talking about. And not just that, but somebody who cares. Because you can have somebody who is so proficient and so qualified and expert in their field, but if they lack that ability to empathise with another person, they will never really understand. And that's what I love about you, erica You're not just somebody who understands, but you actually care. So, as a point of difference, what is the essential way or part of the way that you work?

Erica Voelkel:

An essential part of how I work really is having an empathetic response to people. Looking at their finance is incredibly intrusive. It is a very difficult thing to open yourself and to be your financial soul to another human.

Leon Goltsman:

So there's an element of trust, obviously.

Erica Voelkel:

Oh, absolutely. And there's an element of being judged Having the ability to not judge somebody on being a mum. I will look at a young person's spending habits and think, are you serious Like why, how? Why would you think that that's okay to do? However, being a professional, I can't exhibit that demeanour and I have to be non-judgmental. But explained in a very professional way, that's probably not your best option. So the way I look at it is when you come to me with that vulnerability, I will always offer you trust, consideration and my expertise without judgment.

Leon Goltsman:

I wish more companies were like that, because I feel this day and age a lot of companies they get you to tick boxes. I mean, look, you buy a new phone, you get a software upgrade. To have somebody go through that let's say a lawyer that would end up charging something like $10,000 to say, yep, okay, you should tick it, or no? Look at all these things you're signing over. They're intrusive, they can check your credit rating, they practically can do whatever they want, and yet it's almost like we're just conditioned to tick a box.

Erica Voelkel:

That's correct. We're looking at people that we don't know and we're giving them absolute access to our personal and immediate finances. We wouldn't do that face to face. We would have a reticence about doing that. We would have controls over here. Sign this privacy form and you can can't display my information. You can't use my email to market to me. However, they're, without even regard to what those terms and conditions are, online ticking those boxes and I've seen in the past but those terms and conditions will allow them access to your bank accounts. People didn't know that. That will allow them access to your credit accounts. People didn't know that. That will allow them access to your credit file. People didn't know that. So what we're allowing online, we would not allow face to face.

Leon Goltsman:

Now suppose someone does have a good, strong credit record and yet they still tick the box that allows other people to check their credit file. What could possibly go wrong?

Erica Voelkel:

other people to check their credit file. What could possibly go wrong? Well, we've had an instance, leon, where one of my clients ticked the box. They didn't take up the finance that was offered to them and then, three months later, the finance company rechecked them and there were 15 inquiries from the same finance company, one every three months, because they were keeping them in the loop with updates and information. However, they allowed them to do that by the checkbox and the terms and conditions, and what that meant was their credit rating went from green 800 down to 500 in red, due to the algorithm that looks like they're constantly looking for credit, which means they're cash poor.

Leon Goltsman:

So what you're telling me is that somebody who's done nothing wrong, followed the rules, can still get a bad credit record?

Erica Voelkel:

Yeah, that's absolutely correct, and we'll find also that people just looking to better their interest rate which in this climate, currently this economic climate people are trying to do, and what they're doing is can I afford to pay this? This is the new rate. Again, they'll tick a box that allows a credit check on them even though they're not intending to go to finance or to put a finance application in with that company, and it does. The algorithm drops their credit worthiness.

Leon Goltsman:

And a lot of people don't understand algorithms. I remember the good old days and I said the good old days, it wasn't that long, it's maybe even five, 10 years ago where you could walk into a bank and speak to the general manager or the bank manager. At the time, you knew the tellers. These days, banks are shutting. You don't know who your bank manager is, and is it fair to say that most of it is now done by a computer?

Erica Voelkel:

absolutely. We had a settlement the other day where where our client had to deposit twenty thousand dollars, there was only one open branch in the newcastle area for her to do that and her whole, her whole home settlement relied on her getting that in prior to 2 pm so the settlement could occur and there was no way to electronically transfer that within the timeframe. So they're taking away our ability to manage on the spot work, putting electronic conditions in place, but the electronic conditions don't give us the same response as in-person work does.

Leon Goltsman:

And you know this is the thing as well. We're talking about parents educating their children. Now, if the parent is used to and I know my parents, for instance if they needed something they'd go straight to the bank manager. I still remember what he looked like. I'm sure it doesn't look like that now, but maybe he does but he'd come out there Gary was his name and he would answer my parent. He'd be there whether it's an overdraft, and they knew all the family, they knew the children, they knew their customers. These days that's changed. So if a parent is giving advice to a child, it's a completely different ecosystem now, isn't it?

Erica Voelkel:

Oh, absolutely. Completely different ecosystem now, isn't it? Oh, absolutely. The landscape has changed so much that I often one of the things I often hear is that we've been banking with them for 40 years and they won't give me money for a loan or they won't reduce my interest rate to meet something that's on the market. I can't talk to anybody. Uh, my one of my children wants a loan. They've saved their deposit with them and they're not qualifying for a loan. And yet my house was with them, my brother's house was with them. So that ecosystem of the family banking together and using that as a powerhouse to achieve more does not exist in this day and age.

Leon Goltsman:

Talk about loyalty.

Erica Voelkel:

Loyalty in finance. What's that?

Leon Goltsman:

Yeah, well, I'm actually actually finding it. It's not just finance. Last week we've done an interview with um, with a recruitment agency, and uh, danielle, if you haven't heard it, you definitely check out the last week's podcast but danielle talks about companies that have uh, or employees that have been working for a company for decades and then one day they're out of a job, just like that.

Erica Voelkel:

Yeah, it's again the landscape. In this day and age, nothing is based on loyalty, nothing is based on history. You have to be constantly evidencing your veracity. The thing is now, though, what we need to really emphasize to people. If you would like to buy a home, you need to be planning that three years in advance, not just saving for three years and then decide to buy a home, because there are a lot of things that impact that process. You're trying to convince a lender to give you almost a million dollars.

Leon Goltsman:

That's a huge ask, and you need to prepare for that and I suppose the best thing that the parents can do for their children. You know, and I know a lot of people and they think, oh, let's keep the children happy, let's buy them an ipad or an I or some tablet or a mobile phone from from my conversation with you, I think the best thing that people can do for their children is to empower them to learn how to save oh, absolutely.

Erica Voelkel:

What they need to do is, if there is a goal like that, if there is a goal like an ipad, work on a savings program, work on a chores program, work on a even minus end debit, if they do something incorrect or outside of what they're supposed, to reduce some of the funding. But let the let that grow and let them achieve that, because it's teaching them a whole lot of lessons.

Leon Goltsman:

So even before they start work.

Erica Voelkel:

Oh, absolutely. If you're supplying anything to your children that's of a want nature as opposed to a need nature. Negotiate with them, work with them as a partnership to achieve it.

Leon Goltsman:

Now, I know that you've got a book out there. We're going to talk about that book another time because I'm very excited. I know that as soon as we mention it but do you want to just give us a little hint?

Erica Voelkel:

So Hashtag Money Plan is really telling our young sort of school leavers to early adults that there is a credit file out there, it has their name on it and they are stuffing it up before they even know that they have it. Um, it's talking about the basic life lessons you know. My nephew, for instance, is a whole chapter in the book and he was looking at purchasing a car. The car yard was offering finance over seven years. That meant he would have been paying off thirty five thousand dollars for a twenty thousand000 car. It didn't occur to him to look at it like that, yet his father told him it was overpriced. His father told him not to do it, but it wasn't until he got information from somebody else that it really hit home that it was the wrong thing to do.

Leon Goltsman:

Yeah, but how many people actually? I mean, with social media being such an influence, shouldn't do you feel it's a responsibility of businesses, companies and schools to be able to educate their children, rather than just the parents?

Erica Voelkel:

I think it should be a partnership. In the instance of my nephew, his parents are quite successful, they own their own home and they're knowledgeable on finance and they've managed their finance very, very well. However, there is always that disconnect, I guess, between listening to what your parents tell you to do and making your own decision, and often the information that leads up to that decision needs to come from a variety of sources, both your employer, your parents, and reinforced by a third party expert like a mortgage broker or finance broker so what are some of the common misconceptions about credit and debt that you think parents should address with their children?

Erica Voelkel:

The most common misconceptions that I've seen is that having debt assists you get a home loan. It doesn't. Having revolving debt is not conducive to a home loan application. What you need to do is have a small, manageable debt, if you need to have debt at all. The best thing to help you into a home loan, for instance, is savings. It's an adequate savings to show the funder that you can support what you're after, and you need to be saving 10% more than what any repayments or cost for the home will be.

Leon Goltsman:

As a mother yourself and a recognised financial strategist, how can parents I mean you can provide parents with a lot of information that I don't think they're going to get anywhere else. Now what's the best way for parents who want to do the best for their children and put them on the right path? What is the best way they can contact you?

Erica Voelkel:

Look, feel free to give me a call anytime. My number is 0428 483 444. That's 0428 483 444. Or email me at newcastlehunter, at ljhookerhomeloanscomau.

Leon Goltsman:

And even though you're the leading home loan specialist in the area, you don't just do home loans. You obviously help people find their way.

Erica Voelkel:

Absolutely. We have one of the largest franchises in the country for LJ Hooker Home Loans. We do a lot of development, we do a lot of corporate finance and we do car loans. So we have an amazing team and we have a lot of resources and we have a lot of time to assist anybody with any issues that they have and work out a plan that will really help them.

Leon Goltsman:

And having a saving also gives people a peace of mind. There's a lot of things I mean look, if you're talking to somebody, and sometimes you've got to put a peace of mind. There's a lot of things I mean look, if you're talking to somebody, and sometimes you've got to put yourself in the other person's shoes to really understand their perspective. But if I was a hire, if I was a lender and it was my money, I'd want to know that the people I'm giving it to are responsible of obviously have some discipline. Are people to some degree of good character that they're going to pay back A lending body? They look at the same thing, don't?

Erica Voelkel:

they, the lending body, will look at what you have on your monthly costs, your monthly expenditures. So your bank statement is your financial resume, essentially, and that's what the bank will look at to decide whether or not you are a person they want to do business with, the same as an employer will look at your resume for a job application.

Leon Goltsman:

For those people that are listening to our program. Are there any local resources or programs that families can access for financial education and support?

Erica Voelkel:

Businesses, community organisations and families can contact us. We are partnering up with some great groups to deliver some workshops, have some training and some online resources that really specifically outlines solutions for families and for people in financial distress.

Leon Goltsman:

Well, that in itself is a bit of peace of mind. So if people aren't sure where to start, they can contact you.

Erica Voelkel:

Absolutely.

Leon Goltsman:

And it just seems very daunting finance if you don't know what you're talking about or if you don't have the right people beside you. Because, obviously, from what the key takeaway from this conversation as well is, you got to teach people young, but also, as they get older, they need to be taught as well. So all from all parts of life, from all phases and all stages of life, someone like yourself with the expertise and the knowledge can really be of help as well.

Erica Voelkel:

Absolutely. We've got all sorts of advisors and all sorts of people that give people and all sorts of professionals that give people support, and unless we know that we can access them, unless we know that you can talk to somebody on a credit advice level and get that information, it doesn't necessarily be a have to be a high cost financial planner when you're just wanting basic living information and advice, basic budgeting processes. There are online resources available, quite a lot of them, and the government does have some.

Leon Goltsman:

We'll put some links in the show notes, for sure.

Erica Voelkel:

However, talking to somebody and being able to express exactly what it is that you need is absolutely critical, and that's where we offer, I guess, a difference out there.

Leon Goltsman:

Erica, with all the changes, the constant changes that are hitting us and impacting us daily, how do you stay connected and update on the trends and changes in financial markets?

Erica Voelkel:

Well, as an accredited mortgage broker, we have industry bodies that we affiliate with, and there are a couple in Australia that are the MFAA and the FBAA. They're professional bodies that we associate with and get information and updates. We're also quite close with the lenders that we're accredited with. In fact, I've got a PD day tomorrow, professional Development Day tomorrow. That puts me in the room with CEOs of funders, with the people that make these decisions and policies, and so we get to talk to them, we get to ask questions and we also get to provide feedback from the call face about what's happening with clients and customers and loans and processing conversion, that sort of thing. So they get updates directly from us. They're working very hard at the moment and so are we.

Leon Goltsman:

So, look, we certainly need some good people in in the industry, and especially in the financial industry. What advice would you give to young professionals aspiring to enter the finance industry?

Erica Voelkel:

So my advice to any young professional wanting to enter the finance industry would be to ensure that you are driven by a passion to help people, because that is, first and foremost, what will make you successful in this industry. There is such a need for support, but the right support. There's a need for advice, but the right advice, and you need to be coming from it. You need to be looking at it from a direction of support, empathy, empathy and goal setting. This is not just a one size fits all industry. Every single person is unique and every single person needs support with what they want to achieve and where they want to go with their financial goals and directions. So my advice would be to make sure that you come at it from the perspective of wanting to help people.

Erica Voelkel:

It's a rewarding industry because not only are you helping other people, you're helping yourself by developing those skills and empathy and the ability to problem solve. That's that crosses every industry and it's something that you can take with you if you choose to do something else in the meantime. The financial aspect of it is incredibly rewarding. Helping somebody achieve home ownership is one of the biggest highs I've ever felt in my life, when, particularly when they thought they couldn't do it. So achieving those goals with somebody is amazing and you will find that you don't just help, that it's not a set and forget. You don't help them into a loan and they're gone.

Leon Goltsman:

They're clients, they're friends, an amazing relationship that you take with you and you never know what's around the next corner or what the next relationship might evolve to, and it's incredibly rewarding erica, that's great advice, I think, for anyone entering any professional industry, and that is to have empathy, to do it for the right reasons, because you care about people but you want to help them, and I think. On that note, thank you so much once again, love talking to you and looking forward to catching up with you soon.

Erica Voelkel:

The same with you, leon, looking forward to the future.

Leon Goltsman:

And there you have it. What an insightful conversation with Erica Vogel. A huge thank you to Erica for joining us today and sharing her wealth of knowledge. One key takeaway is the importance of having a solid financial resume. Whether you're applying for a home loan or preparing for the future, it's vital to understand how the information you provide and permissions you grant can impact your application. It's not just about ticking boxes. It's about positioning yourself for success. If you'd like more details or to get in touch with Erica, be sure to check out the show notes for more information.

Leon Goltsman:

Next week, I'm excited to introduce you to another special guest, mitch Toner from Alaris Technologies. Mitch has been a huge supporter of small business and provides tailored technology solutions that improve communication, team efficiency and business outcomes. He's also a proud 2024 finalist of the BX Business Excellence Awards and we're thrilled to have him share his insights with us. Technology is the backbone of modern business, but when things go wrong and, let's be honest, they often do at the worst possible moments Mitch will cover the essential systems that keep businesses running smoothly. Whether you're a business owner, managing a family or leading an enterprise, you won't want to miss it, so be sure to tune in next week I'm your host, leon Goltsman, and until then, stay connected, stay informed and let's keep making a difference together.

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Leon Goltsman

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Erica Voelkel

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